Correlation Between Easy Software and Whirlpool
Can any of the company-specific risk be diversified away by investing in both Easy Software and Whirlpool at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Easy Software and Whirlpool into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Easy Software AG and Whirlpool, you can compare the effects of market volatilities on Easy Software and Whirlpool and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Easy Software with a short position of Whirlpool. Check out your portfolio center. Please also check ongoing floating volatility patterns of Easy Software and Whirlpool.
Diversification Opportunities for Easy Software and Whirlpool
0.62 | Correlation Coefficient |
Poor diversification
The 3 months correlation between Easy and Whirlpool is 0.62. Overlapping area represents the amount of risk that can be diversified away by holding Easy Software AG and Whirlpool in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Whirlpool and Easy Software is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Easy Software AG are associated (or correlated) with Whirlpool. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Whirlpool has no effect on the direction of Easy Software i.e., Easy Software and Whirlpool go up and down completely randomly.
Pair Corralation between Easy Software and Whirlpool
Assuming the 90 days trading horizon Easy Software AG is expected to under-perform the Whirlpool. In addition to that, Easy Software is 1.77 times more volatile than Whirlpool. It trades about -0.06 of its total potential returns per unit of risk. Whirlpool is currently generating about 0.34 per unit of volatility. If you would invest 11,080 in Whirlpool on October 20, 2024 and sell it today you would earn a total of 1,385 from holding Whirlpool or generate 12.5% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Significant |
| Accuracy | 100.0% |
| Values | Daily Returns |
Easy Software AG vs. Whirlpool
Performance |
| Timeline |
| Easy Software AG |
| Whirlpool |
Easy Software and Whirlpool Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Easy Software and Whirlpool
The main advantage of trading using opposite Easy Software and Whirlpool positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Easy Software position performs unexpectedly, Whirlpool can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Whirlpool will offset losses from the drop in Whirlpool's long position.| Easy Software vs. FAIR ISAAC | Easy Software vs. ITALIAN WINE BRANDS | Easy Software vs. SEALED AIR | Easy Software vs. Air New Zealand |
| Whirlpool vs. Stag Industrial | Whirlpool vs. FIREWEED METALS P | Whirlpool vs. UNIQA INSURANCE GR | Whirlpool vs. Ultra Clean Holdings |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Competition Analyzer module to analyze and compare many basic indicators for a group of related or unrelated entities.
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